Oil fell on Monday as investors continued to unwind bets on higher prices after record cuts last week because of concerns that growing U.S. oil output could hamper an OPEC-led deal on production reductions.
Benchmark Brent crude futures were down 31 cents at $51.45 a barrel by 1409 GMT. U.S. West Texas Intermediate (WTI) crude futures fell by 52 cents to $48.26.
“Speculative investors have thrown in the towel, it seems. We’ve got record selling in the week ending March 14 and the bleeding has not stopped yet,” said Carsten Fritsch, senior commodities analyst at Commerzbank in Frankfurt.
Oil futures have retreated in the past two weeks as a supply overhang driven by rising production from the United States overshadows a deal by OPEC and other producers to rein in crude output.
Last week speculators cut more than 150,000 contracts betting on firmer U.S. and Brent oil prices, a record high.
Latest U.S. drilling data supported estimates for higher production, with 14 oil rigs added in the week to March 17 to 631, the most since September 2015, energy services company Baker Hughes Inc said on Friday.
Growing U.S. production is playing into concerns about the effectiveness of the deal between members of the Organisation of the Petroleum Exporting Countries (OPEC) and other producers.
The prospect of higher output from Libya, which is exempt from the deal, is adding further bearish sentiment.
Libya’s National Oil Corporation (NOC) said it was confident of regaining control of two key oil ports, Es Sider and Ras Lanuf, which have combined capacity to export 600,000 barrels per day (bpd), reports Reuters.
“Hedge selling from producers and long-liquidation from funds is a bearish cocktail,” said Ole Hansen, Saxo Bank’s head of commodities strategy.
An upgrade in supply estimates also led analysts at J.P. Morgan to cut their 2017 and 2018 price forecasts.
“The risks that OPEC has painted itself into a corner cannot be ignored and it may need to extend, or even increase, cuts if the response from shale producers is more vigorous than we currently model,” they said in a report.
In a further sign that key OPEC member Saudi Arabia was adhering to its output cut pledges, official data showed that its crude exports fell by about 300,000 bpd in January.